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The blessing and curse of fundraising for higher education

Can you name the top three American universities that raised the most money last year?

If Harvard topped your list, you’re right. The nation’s oldest institution of higher education raised $1.19 billion in the 2016 fiscal year. Perhaps some other Ivy League universities made your list, like Yale or Columbia, or that basketball juggernaut, Duke, or those Midwestern universities that seem to have tons of loyal alumni, like Notre Dame or Michigan.

You’d be wrong on all fronts. Number two on the list was Stanford University, which raised $951 million. And probably few people would have guessed number three: the University of Southern California. It raised $667 million, about as much as Northwestern and Princeton universities combined.

One of the prodigious fundraisers at USC was its medical school dean, Carmen Puliafito, who in his decade at the university was known for raising hundreds of millions of dollars as well as the school’s profile and rankings. But over the last month, Puliafito and his role at USC has come to resemble that of a Hollywood drama. In a series of stories, the Los Angeles Times reported how Puliafito partied with criminals and prostitutes and used drugs on campus. Some of the antics were caught on video.

Since then, the university’s senior leadership and its president, C.L. Max Nikias, have come under fire about whether they acted appropriately in dealing with Puliafito, with some wondering if officials overlooked problems with the dean because he was such a successful fundraiser. Nikias has acknowledged that officials “could have done better” in handling the situation.

On Friday, a senior vice president of USC, Albert R. Checcio, said in a letter to faculty, staff and alumni that Puliafito’s fund-raising role should not be overstated. He said Puliafito “was responsible for barely one percent” of $1.2 billion USC had raised for medicine over seven years.

Colleges That Raise the Most in Private Donations, 2016

  1. Harvard U.                                     $1,187,530,292
  2. Stanford U.                                        $951,149,098
  3. U. of Southern California               $666,640,686
  4. Johns Hopkins U.                            $657,292,634
  5. U. of California at San Francisco  $595,940,070

Source: Council for Aid to Education

That USC now ranks among the top fundraisers in higher ed has allowed the university to achieve a lofty status that three decades ago seemed unimaginable. In the 1990s, USC was struggling to overcome its reputation as a party school in a bad neighborhood, which was partly a result of the Los Angeles race riots that played out on national television.

After the riots, many parents worried about sending their daughters to south-central Los Angeles, and the number of women in the incoming freshman class dropped to 40 percent. Rather than run away from its location, USC unleashed a marketing campaign that played up its advantages, complete with photographs that set campus landmarks against a backdrop of skyscrapers.

USC’s efforts paid off, moving “the university geographically in the minds of people, without a moving van,” said Morton Schapiro, a former dean of letters, arts and sciences at USC and now president of Northwestern.

By 1999, Time magazine named USC its College of the Year. In the decades since the riots, the university’s endowment has quintupled, and its acceptance rate has plummeted from 70 percent to 16 percent as applications surged from 10,000 to now nearly 60,000. Earlier this year, Nikias announced that USC had reached its $6 billion goal in the university’s latest fund-raising campaign, way ahead of schedule. (Frederick J. Ryan Jr., publisher and chief executive of The Washington Post, is a member of the USC board of trustees.)

Within higher education, USC has become a Cinderella story, met partly with awe but also some envy among presidents. Fundraising is now the most important part of the day-to-day job of a college president, according to a study this year on the presidency that I co-authored. The study was released by Georgia Tech’s Center for 21st Century Universities and Deloitte’s Center for Higher Education Excellence. Despite its importance to their job, many presidents say they feel unprepared for the amount of fundraising they need to do on a regular basis.

So when leaders are good at it like they have been at USC, the race for dollars begins to permeate the culture. Raising more than a million dollars a day takes leaders away from campus and doesn’t allow them enough time to engage with faculty members and students and weave themselves into the fabric of the school they represent on a daily basis.

It also changes the stakeholders of the university. Donors, often alumni, become just as important as students and faculty in making decisions on campus. This has been particularly true for many of the big issues that grab headlines about colleges: drinking, fraternities and athletics. Several college leaders have told me that they are reluctant to place restrictions on any of them because they don’t want to offend alumni (read: donors) who like to recall the good old days of their youth when colleges weren’t so paternalistic. This is a problem especially for big public colleges and universities that increasingly depend more on alumni donations than they do state taxpayer dollars.

While raising more private money has allowed universities like USC to invest in new facilities, cutting-edge research, top-notch faculty, and scholarships for students, fundraising also has been a curse for higher education. It has made college leaders reluctant to take tough stances on campus or national issues and has turned the pursuit of money into a campus priority, sometimes at all costs.